Everyone should be into crypto, right?
I mean, why not, it’s the newest and most secure way to transfer money.
Bitcoin has been around in the world long enough that we can now trust it and everyone has a friend of a friend who is making a killing in trading it…
But, as usual, the gold rush blitz of people rushing to invest in the latest Initial Coin Offering (ICO), which promises to go from 0.00000000023p to a $5000 coin valuation (meaning you can drive a Lambo and rest on a beach somewhere for the rest of your life) opens up a door for cyber criminals.
These scams can take many forms but, as e-toro reports, most of them centre around dodgy Initial Coin Offerings (ICOs). These ICOs are the crypto equivalent of an Initial Public Offering (IPO), but they typically happen a lot earlier and draw people in on the promise of being on the ground floor before the sharp increase in price hits.
What are some of the most notable Crypto scams?
Sofia Illegal Trading
A group of fake binary options and crypto exchanges had been operating in Eastern Europe and made over $100m of fake trades.
- The Impact = Losses of $115m
Mt. Gox HAck
A hack on this Crypto exchange meant that Bitcoin price dropped to $0.01 which the hack then used to transfer the Bitcoin to himself and then sell them all back at the higher price.
- The Impact = Lost 850,000 Bitcoin and the company went into liquidation in 2014
Indian ICO fraud
Amit Lakhanpal the founder of Money Trade Coin (MTC) ran a fake ICO which cheated investors out of their cash despite the coin never being listed on any exchanges.
- The Impact = Losses of $71.6m
So, how can you protect yourself against Crypto scams?
The Federal Trade Commission (FTC) recommend:
- “Research before you invest. Search online for the company and cryptocurrency name, plus ‘review,’ ‘scam,’ or ‘complaint."
- “Be wary of guarantees and big promises. Scammers often promise you’ll make money quickly, or that you’ll get big payouts or guaranteed returns. They might offer you free money paid in cash or cryptocurrency — but, even if there’s a celebrity endorsement, don’t buy it. You’ll make money if you’re lucky enough to sell your crypto for more than you paid. Don’t trust people who say they know a better way."
- “Anyone who says you have to pay by cryptocurrency, wire transfer, or gift card is a scammer. If you pay, there’s usually no way to get your money back.”
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